On January 27, 2014, the Supreme Court of the United States reversed a nearly $1.2 million jury verdict for defamation against Air Wisconsin Airlines Corporation in a case surrounding the airline carrier’s report about a pilot to the Transportation Security Administration (TSA). The Court found the carrier immune, under the Aviation and Transportation Security Act (ATSA), 49 U.S.C. § 44941, for making the report and held that the actual malice standard of New York Times Co. v. Sullivan, 376 U.S. 254 (1964) applies to the ATSA’s immunity exception. In analyzing the statements made by the airline to the TSA, the Court found that although company officials could have phrased their concerns more accurately, the statements were not materially false and thus did not result in the loss of the carrier’s immunity. Air Wisconsin Airlines Corp. v. Hoeper, No. 12-315, Supreme Court of the United States (January 27, 2014).

Background

William Hoeper had been a pilot for Air Wisconsin since 1998 when, in 2004, he failed the fourth and final simulator training session required for him to qualify to fly a new aircraft type. After the training session ended, Hoeper tossed his headset down and in a raised voice cursed and accused his instructor of “railroading the situation.” Shortly after the session, Air Wisconsin officials began discussing Hoeper’s angry outburst, the impending termination of his employment, examples of assaults by other disgruntled airline employees, and Heoper’s status as a Federal Flight Deck Officer (FFDO), which allowed him to carry a firearm on board commercial flights. The officials then decided that the TSA should be contacted about the situation pursuant to the ATSA.

A member of Air Wisconsin’s management team immediately contacted the TSA and reportedly stated that Hoeper “was an FFDO who may be armed,” questioned his “mental stability,” and said that Hoeper “was terminated today.” After receiving this report, the TSA ordered Hoeper’s outbound flight to return to the gate. Hoeper was removed from the flight, searched, and questioned about the location of his firearm. After confirming he was not presently armed, Hoeper was placed on a later flight home and was fired the next day by Air Wisconsin.

Heoper filed suit against Air Wisconsin in Colorado state court, alleging defamation among other claims. Air Wisconsin filed a summary judgment motion based on ATSA immunity, but the trial court denied the motion, ruling that the issue should be submitted to the jury. At trial, the jury found in Hoeper’s favor on the defamation claim and awarded him over $1.2 million. The Colorado Court of Appeals affirmed this award.

The Colorado Supreme Court also affirmed the award, but held that “immunity under the ATSA is a question of law to be determined by the trial court before trial.” Despite this disagreement with the trial court as to the province of the judge and jury, the Colorado Supreme Court found the trial court’s error harmless. The court declined to decide whether the statements actually were true or false, instead holding that Air Wisconsin made its statements “with reckless disregard of their truth or falsity.” The Supreme Court of the United States agreed to hear the case to decide whether immunity under ATSA may be denied absent a determination that the carrier’s statements were materially false.

Legal Analysis

The ATSA provides immunity for domestic and foreign air carriers and their employees for reports made pursuant to the ATSA. However, air carriers lose their immunity if they make these disclosures “with actual knowledge that the disclosure was false, inaccurate, or misleading” or “with reckless disregard as to the truth or falsity of that disclosure.” Justice Sotomayor began by pointing out that Congress drafted the ATSA’s exception to immunity using the actual malice standard of New York Times. Accordingly, an air carrier that makes statements pursuant to the ATSA is entitled to immunity unless the statements are materially false. Justice Sotomayor further explained that the ATSA encourages air carriers to provide information to the TSA so the agency can assess and investigate potential security threats. As long as the statements made pursuant to the ATSA are not materially false, immunity will apply to the airline and its employees.

The Court examined the difference between material falsehood under a defamation claim contrasted from a claim for immunity under the ATSA. For defamation, a falsity is material if it affects the plaintiff’s reputation in the community. For ATSA immunity, the falsehood is analyzed viewing the agency’s perception and subsequent response to a potential security threat. Therefore, a statement is material only if there is “a substantial likelihood that a reasonable security officer would consider it important” in determining how to respond to a potential threat.

In reviewing Air Wisconsin’s statements to the TSA, Justice Sotomayor pointed out that the description of Hoeper as an FFDO who may be armed was literally true. The Court declined to require the manager who reported that fact to the TSA to have qualified his statement by adding that he did not have proof that Hoeper had a gun in his possession. And although the statement that Hoeper “was terminated today” was not true, it was common knowledge that his discharge was imminent. Hoeper argued that this statement had a material influence on the TSA. However, the Court pointed out that regardless of whether his firing had already occurred or was about to occur, no reasonable security officer would have reacted differently.

Finally, the Court found that even if the manager had described Hoeper’s outburst and behavior more specifically instead of having questioning his “mental stability,” it would not have made a material difference to the TSA. Justice Sotomayor aptly pointed out that in the fast-paced world of airline security, taking the time to carefully parse words and run all text by counsel leads to “exactly the kind of hesitation that Congress aimed to avoid” in giving air carriers ATSA immunity. The Court held that Air Wisconsin was entitled to immunity under the ATSA and reversed the Supreme Court of Colorado and the underlying jury award.

Justice Scalia wrote a dissenting opinion, joined by Justice Thomas and Justice Kagan, in which he agreed with the applicable legal standard of actual malice. However, he dissented from the majority in its finding that Air Wisconsin was immune as a matter of law, stating that he would have remanded for a decision below as to whether the statements were materially false.

Practical Impact

Air Wisconsin Airlines Corp. v. Hoeper is an important decision for air carriers and their employees who can now breathe a slight sigh of relief. The Supreme Court clarified the application of New York Times Co. v. Sullivan to the ATSA and set a standard (with substantial precedent) of where immunity ends and liability begins. As long as the carrier is truthful in its statements to the TSA, immunity will protect its efforts to comply with the ATSA requirements and ensure airline safety.

Although this case is encouraging, Justice Scalia’s dissent should not be ignored as it reveals the danger of making inaccurate statements to the TSA. In the heat of the moment when things literally move at 500 miles per hour, company management still must pause long enough to confirm the facts and make a truthful, accurate report to the TSA. Otherwise, if a false statement causes the TSA agent to act, the company can find itself on the wrong side of the TSA, the employee, and a jury.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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